Morning Briefings
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Fedspeak
(1) From plain-vanilla Fed governor to Numero Uno. (2) Learning-by-doing. (3) The power of words. (4) Powell’s, Put, Pivot, and Pirouette. (5) What does Powell mean to do next? (6) The Fed’s wordsmith department. (7) “Measured” was Greenspan’s favorite word. (8) Firming was needed before the Great Recession, then exceptionally low interest rates were the order of the day. (9) Defining “extended period.” (10) From “gradual” to “patient” to “appropriate,” and back again to what? (11) Keeping it real simple.
Global Economy: More Slow-Mo
(1) Powell’s Pivot and Pirouette will be tested this week. (2) The comforts of a Stay Home investment strategy. (3) Payroll employment zigs and zags the fixed-income markets. (4) One-and-done or none-and-done? (5) 50, 25, or zero bps? (6) Do the ECB and BOJ matter more than the Fed? (7) What’s wrong with Germany? (8) Sol y sombra: NM-PMI & M-PMI. (9) Leading to no good. (10) Forward revenues still on sunny side.
Another Powell Pivot Ahead?
(1) Neither weak demand nor dwindling supply in labor market, so far. (2) In our best-case scenario, productivity offsets labor shortages. (3) Labor force growth slows to a trickle. (4) Productivity growth collapsed during the Great Inflation and Great Recession. (5) The case for better real pay gains. (6) Good for consumers: Earned Income Proxy at record high. (7) Is a Fed rate cut still appropriate? (8) Will Powell pivot again?
Plastic: The Last Straw
(1) Let’s hit the beach. (2) Fracking boom sparks explosion in ethane production and plastic plants. (3) The plastics industry is a large driver of future demand for oil and gas. (4) Plastics getting trashed from all directions as recycling and reduced use are pushed by the woke, including some in corporate America. (5) Revised advice for this year’s graduates? (6) Companies embracing robots. (7) Waiting for robots to flip burgers at 4th of July BBQs.
The Rodney Dangerfield of Economic Expansions
(1) Happy birthday, expansion, and many more! (2) No boom, no bust. (3) The Trauma of 2008. (4) Longest expansion is also one of the most lag-prone expansions. (5) Credit crunches cause recessions, not old age. (6) Distressed asset funds are the new shock absorber in the credit markets. (7) Not enough distressed assets for DAFs. (8) Powell’s mini credit meltdown. (9) Do buybacks drive the stock market or vice-versa? (10) Joe’s updated analysis still finds negligible impact of share count on stock performance.
Turbulence for FedEx
(1) Fed’s Powell confirms our thinking: Don’t bank on a rate cut just yet. (2) “Appropriate” doesn’t mean imminent. (3) FedEx’s Smith frowns upon the US’s and China’s trade behavior. (4) FedEx hurt by slowing trade, but more’s afoot too. (5) S&P 500 Air Freight & Logistics industry has crashed so far it may be a bargain. (6) Shopify disrupting retail by helping little guys compete. (7) Planning to visit the “Most Interesting Store in the World.”
Earnings Season’s Greetings
(1) Get ready for another quarterly upside hook. (2) S&P 500 forward revenues and earnings per share at record highs. (3) Will macro slowdown show up in micro earnings reports? (4) Consumers are in a good place, though their confidence moderated a bit in June. (5) Are jobs really getting harder to find, or are skill mismatches getting worse? (6) Home sales should get a lift from lower mortgage rates. (7) Business equipment production is mostly down ytd with exception of information processing equipment. (8) Defense output taking off. (9) Mixed picture: trucks vs railroads. (10) Bank loans at record high. (11) Hard to find anything good to say about overseas economies. (12) Two studies with different results about S&P 500’s foreign sales exposure.
Lots of Central Bank Liquidity
(1) Normalization will have to wait. (2) Powell, Draghi, and Draghi. (3) Bears are still fighting the central banks. (4) The bears’ favorite chart has been mostly bullish. (5) The Powell Pivot has turned into the Powell Pirouette. (6) QT set to end in US. QE might be back on in Eurozone soon. (7) Kuroda, like Peter Pan, taking the BOJ to Neverland. (8) PBOC’s assets flatten, but cuts in required reserves boosting bank loans. (9) Clash of the titans: central banks vs the 4Ds. (10) Central banks are dependent on (weak) data.
Relief Rally #63
(1) What's next: more new highs or yet another panic attack? (2) Geopolitics getting more attention. (3) Jerome Powell is on standby to respond to China, Iran, or any other crisis. (4) Mario Draghi wants to help too. (5) Still traumatized by Trauma of 2008. (6) A list of 63 panic attacks. (7) New stock market highs despite inverting yield curve. (8) LEI stalls at record high. (9) CEI signaling slower GDP growth, not recession. (10) The Fed's word game. (11) "Patient" and "transient" are out, while "appropriate" is in. (12) July rate cut not a sure thing.
Oil & Libra
(1) There’s power in US energy independence. (2) OPEC and global GDP pushing oil in opposite directions. (3) Oil rallies on Trump/Xi meeting news. (4) Agencies cut oil forecasts. (5) US rig count falling but oil still gushing. (6) Plastics, solar, and electric cars shape oil’s future. (7) Facebook says, “Trust us with your money…really.” (8) Tech giant wants to be a banking giant, too.
Whatever It Takes, Again
(1) Can monetary policy fix all problems? (2) Pumping more liquidity. (3) Wealth Effect isn’t trickling down. (4) NIRP in Europe and Japan. (5) Draghi ready to do more of whatever. (6) Modern Tether Theory of the US bond market. (7) Draghi as Sisyphus. (8) EU car sales hitting bottom? (9) Powell’s new obsession: ELB. (10) Is ELB lower than ZLB? (11) The Fed doesn’t have much powder left and should keep it dry. (12) Stocks after first rate cut.
Progressive Economics for Dummies (PED)
(1) Everything for free. (2) Wealth taxes and MMT. (3) Heaven on Earth for all. (4) Are you better off than you were 20 years ago? (5) Never enough. (6) Bill and Elizabeth’s excellent adventure. (7) So why are consumers so upbeat? (8) Happy to quit. (9) Real pay per worker on uptrend since 2000, and so is real income per household. (10) Only 1.3 million taxpayers are in the 1% club. (11) S corporations exaggerate profits’ share of national income. (12) Why are corporations buying their shares back after they’ve run up so much? (13) MMT will make your head spin.
The Mice That Roared
(1) A big mess from one end of the globe to the other. (2) The world’s economy is flat. (3) Why are stocks holding up so well? (4) Donald Trump vs Peter Sellers: US roars back at all the roaring mice. (5) The Fed is ready to help if need be. (6) Inflation is still MIA. (7) Industry analysts remain mostly upbeat on revenues and earnings. (8) Q2 earnings estimates down y/y, but not by much. (9) American consumers doing what they do best. (10) The Fed is listening mostly to academics
Material World
(1) The metal with the PhD in Economics has been a doomsayer for the past year, depressed by trade issues. (2) Copper price has lost 19% y/y, and the S&P 500 Copper stock price index more than twice that. (3) Only this past week has some luster returned. (4) But all that glitters isn’t copper; other S&P 500 Materials-sector industries have been sparkling ytd. (5) Prospects for Construction Materials—also an economic barometer—look particularly bright. (6) New, new thing in retail—stores without addresses or inventory—are giving traditional retailers, Amazon included, a run for their money.
Positive Spins
(1) Is the problem the demand for or the supply of labor? (2) Finally running out of qualified workers. (3) Job openings exceed unemployed workers by record amount. (4) Lots more job openings in cyclical industries, including durables manufacturing and construction. (5) Fewer openings in retail. (6) Labor force shrinking again as Baby Boomers retire faster than younger adults seek jobs. (7) Lots of help wanted at small businesses. (8) Counting on productivity. (9) No recession in latest C&I loans. (10) Fed survey finds that most Americans are comfortable.
Global Scorecard
(1) Spreading soft patch. (2) Easing does it for a while longer. (3) Trump will make or break the global outlook. (4) Famous last words: There will be peace in our time. (5) No rush to leave home and go global. (6) Using China’s trade data to assess the global economy. (7) Still looking like a slowdown rather than a downturn. (8) Europe has problems. (9) Some important soft patches in US. (10) Beige Book is neither red nor green.
Paris, Maine
(1) Watching mountains. (2) Absurd policies possible in the New Abnormal. (3) A deal with Mexico. (4) He said, Xi said. (5) Another panic attack rather than start of bear market? (6) Plenty of job openings, while labor force is shrinking. (7) Wage gains outpacing price increases, as productivity is rebounding. (8) A happy version of the New Abnormal. (9) The 4Ds keeping a tight lid on inflation. (10) Pity the impotent central bankers.
Big Government vs Big FANGs
(1) Is Powell ready to pull the trigger for a rate cut? (2) Fed’s latest word game. (3) What does “appropriate” mean? (4) Is Powell ready to fly with the doves? (5) The debate about a “makeup” strategy for inflation targeting. (6) Rate-cutting risks causing financial instability. (7) Comparing 2019 to 1999. (8) Willy Sutton and the FANGs. (9) Bullish for lobbyists and lawyers. (10) Remember what happened to Microsoft. (11) Growth is scarce. FANGs have it.
Are Analysts Unperturbed or Uninformed?
(1) Are industry analysts too busy to watch the news? (2) Waiting for guidance. (3) Q2 earnings season is coming. (4) Consensus revenues forecasts remain upbeat in the US and abroad. (5) Q1 revenues and earnings growth rates hit cyclical lows? (6) Falling share count added 2.3ppts to Q1 per-share revenues and earnings growth. (7) Blaming the weather, the dollar, and trade tensions. (8) Macro indicators for revenues remain subdued. (9) Looking like an earnings growth recession during H1. (10) The earnings hook again. (11) Joe finds no significant relationship between buybacks and stock prices.
Uncharted Waters
(1) One more month to go to US economy’s 10-year jubilee. (2) LEI does look toppy. (3) More record highs ahead for CEI. (4) No boom, no bust. But what about protectionism? (5) Jury is out on Trump’s helter-skelter approach to trade. (6) Some misgivings about LEI signals during the longest expansion on record. (7) Some cyclical indicators (like jobless claims) simply can’t get much better. (8) Business loans at record high. (9) Borrowing by NFCs in the bond market cooled off dramatically last year. Why?
Trade: Helter Skelter
(1) Stepping up the pressure on Mexico. (2) Will there be any relief for the latest panic attack? (3) Recession signals from the bond market? (4) Yield curve predicting easier monetary policy. (5) US beef with China is about more than just trade. (6) China’s M-PMI shows weakening economy. (7) Mexican standoff. (8) Clarida’s Put. (9) Slicing and dicing NIPA profits. (9) Movie review: “Rocketman” (+ +).
Tapping the Brakes
(1) Are Transports hitting a speed bump? (2) What’s shaking the movers? (3) Shipping hitting tariffs sand bar. (4) Truckers fear the growing Bezos transportation empire. (5) Rail traffic chu-chug-ging slower. (6) Air Freight & Logistics company warns supply chains are up in the air pending tariff resolution. (7) Suffering from senior moments? There are apps for that.
Bonds Have More Fun
(1) Wrong-way bond forecasts. (2) Tethered at the hip. (3) Bond Vigilantes vs Yield Reachers. (4) US bond yields remain outstanding in a world of NZIRP, ZIRP, NIRP, and QE. (5) Low inflation driving bond yields. (6) Economic surprise index also driving bond yields. (7) Yields fall as consumer optimism rebounds. (8) The trade war’s impact. (9) Summers and Krugman attack Kelton’s MMT. (10) Our argument against MMT: Too much debt weighs on growth and can be deflationary.
Game of Thrones
(1) A disappointing ending. (2) Trump’s Game of Thrones spans the world. (3) The new endgame scenario includes no end to trade war with China. (4) Another bearish May will soon go away. (5) Mixed messages from credit markets. (6) The dollar is betting on Trump to win the trade war with China. (7) Both sides still need a deal, but they need to resume trade talks. (8) Panic Attack #63? (9) The world economy remains in pain. (10) Stable genius vs Mao in a business suit. (11) Trump’s iron throne doesn’t have the power to unseat Powell from his Chair. (12) Trump and Pelosi rant wars.
CEOs Discussing Tariffs
(1) In the trade war's trenches. (2) Coming back to America. (3) Leaving China, seeking new suppliers. (4) Earnings hits coming. (5) A letter of protest from sneaker companies. (6) The not-so-good earth for farmers. (7) Huawei getting chipped. (8) It was a really bad winter. (9) Department Stores on sale. (10) Home Improvement Retail fundamentals still improving.